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Aug 08
2024

Gold price seems poised to appreciate further amid Fed rate cut bets, modest USD weakness

Gold price (XAU/USD) gains some positive traction on Thursday and snaps a four-day losing streak, albeit lacks follow-through and remains below the $2,400 mark heading into the European session. 

Technical Overview

Gold price (XAU/USD) gains some positive traction on Thursday and snaps a four-day losing streak, albeit lacks follow-through and remains below the $2,400 mark heading into the European session. The lack of bullish conviction, meanwhile, warrants some caution before positioning for any meaningful appreciating move, though the fundamental backdrop seems tilted firmly in favour of bullish traders. 

Investors remain concerned about an economic slowdown in China and a possible US recession. This, along with escalating geopolitical tensions in the Middle East, should act as a tailwind for the Gold price. Furthermore, expectations for bigger interest rate cuts by the Fedral Reserve (Fed) keep the US Dollar (USD) bulls on the defensive and validate the positive outlook for the non-yielding yellow metal. 

 

Fundamental Overview

Any further positive move beyond the $2,400 mark is likely to confront some resistance near the $2,410-2,412 supply zone. A sustained strength beyond might trigger a short-covering rally and push the Gold price to the $2,430 intermediate hurdle en route to the next relevant barrier near the $2,448-2,450 horizontal zone. Some follow-through buying should pave the way for a move towards retesting the all-time peak, near the $2,483-2,484 area touched in July. This is closely followed by the $2,500 psychological mark, which if cleared should set the stage for a further near-term appreciating move.

On the flip side, the Gold price might continue to attract buyers around the 50-day SMA support, currently pegged near the $2,368 region. The subsequent slide has the potential to drag the XAG/USD to last week's swing low, around the $2,353-2,352 zone, en route to the $2,344 area, or the 100-day SMA. Some follow-through selling below the latter will be seen as a fresh trigger for bearish traders and pave the way for deeper losses. Given that oscillators on the daily chart have just started gaining negative traction, the commodity might then accelerate the downfall towards the $2,300 round figure.

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